Fiji Water reverses plans to quit Fiji Islands

SUVA, Fiji 
Fiji Water reopened its operations in the South Pacific nation of Fiji on Wednesday - just two days after closing its bottling plant and laying off 400 workers in a row over a major government tax increase.

The U.S.-owned company said after meeting with Fiji's leaders it has agreed to "comply" with the hefty tax hike imposed on it by Fiji's military-led regime.

The prime minister, Commodore Frank Bainimarama, said earlier he was ready to call tenders from international groups interested in taking over the artesian water bores that Fiji Water uses to extract one of the world's most popular bottled water brands.

On Monday the company, owned by California entrepreneurs Lynda and Stewart Resnick, said it was closing its facility in Fiji, canceling orders from suppliers and putting on hold several construction contracts in the country.

After its lawyers met Tuesday with Bainimarama and Fiji's Attorney General, Aiyaz Sayed Khaiyum, the company said it a short statement that "Fiji Water will reopen its bottling plant, effective Wednesday morning, Dec. 1, at its regular start up time of 8 a.m. Through our discussions, we have also agreed to comply with Fiji's new water tax law."

"Fiji Water is committed to working with the Fijian government, and remains dedicated to helping the country's economy and its people," it said, without elaborating.

On Wednesday, Bainimarama said he was delighted with the company's decision.

"The only comment I can make is that an excellent news from Fiji Water and we want to thank Fiji Water for everything, especially starting back the factory and bringing back the workers" he told the Legend FM radio network.

On Monday, Fiji Water president John Cochran said Fiji's government had announced it was imposing a new tax rate of 15 cents per liter on companies extracting more than 3.5 million liters (920,000 gallons) of water a month - up from the current one-third of one percent rate. Fiji Water is the only company extracting that much water.

He said the new tax was untenable and left Fiji Water no choice but to close its Fiji facility. The company sells its Fiji-extracted bottled water in more than 40 countries.

The tax rise comes amid a deep downturn in Fiji's economy that is blamed on political instability following a coup in 2006 by armed forces chief Bainimarama - Fiji's fourth coup since 1987. Key trading partners have imposed various sanctions on the government, including European Union restrictions on the vital sugar industry.

Bainimarama's government has also taken a hard line with other foreign companies. Rupert Murdoch's News Ltd. in September sold its controlling stake in Fiji's main daily newspaper after the government imposed strict new foreign ownership limits on media companies.

Cochran said that the government's action had sent a clear and unmistakable message to businesses operating in Fiji or looking to invest there that the country was increasingly unstable and becoming a very risky place in which to invest.

But he added Fiji Water remained willing to work through the issue with the government, and preferred to keep operating in Fiji.